Correlation Between Anglo American and Metals X

Can any of the company-specific risk be diversified away by investing in both Anglo American and Metals X at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Anglo American and Metals X into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Anglo American PLC and Metals X Limited, you can compare the effects of market volatilities on Anglo American and Metals X and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Anglo American with a short position of Metals X. Check out your portfolio center. Please also check ongoing floating volatility patterns of Anglo American and Metals X.

Diversification Opportunities for Anglo American and Metals X

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Correlation Coefficient

Anglo American  Metals X

Pay attention - limited upside

The 3 months correlation between Anglo and Metals is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Anglo American PLC and Metals X Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metals X Limited and Anglo American is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Anglo American PLC are associated (or correlated) with Metals X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metals X Limited has no effect on the direction of Anglo American i.e., Anglo American and Metals X go up and down completely randomly.

Pair Corralation between Anglo American and Metals X

Assuming the 90 days horizon Anglo American PLC is expected to under-perform the Metals X. But the otc stock apears to be less risky and, when comparing its historical volatility, Anglo American PLC is 6.52 times less risky than Metals X. The otc stock trades about -0.31 of its potential returns per unit of risk. The Metals X Limited is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  26.00  in Metals X Limited on October 6, 2024 and sell it today you would earn a total of  0.00  from holding Metals X Limited or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Anglo American PLC  vs.  Metals X Limited

Anglo American PLC

Risk-Adjusted Performance

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Very Weak

Over the last 90 days Anglo American PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Metals X Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Metals X Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Anglo American and Metals X

The main advantage of trading using opposite Anglo American and Metals X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Anglo American position performs unexpectedly, Metals X can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Metals X will offset losses from the drop in Metals X's long position.

The idea behind Anglo American PLC and Metals X Limited pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.